Denmark to Destroy Danish Air Supply and EV Market
While the world recoils at Volkswagen’s cheating, dirty diesel cars, Denmark has fallen off the green vehicle bandwagon.
Previously, Denmark had striven to make electric vehicles more attractive to reduce harmful exhaust emissions by giving out enormous tax breaks (normal taxes on a car in Denmark is a whopping 180%). Instead, now the new Danish government administration has decided that, in order to wipe out every trace of the previous leading party’s policies, they will be getting rid of the tax break for electric cars.
Instead, the new administration will be cancelling an emissions tax in an effort to encourage people to buy diesel (yes, diesel) cars.
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This is especially catastrophic news for two groups in particular: Danish people with lung disease and Tesla.
The price of the Tesla, previously low and attractive to Denmark’s car buyers, is nearly going to triple, from 650,000 kroner ($97,665) to about 1.8 million kroner ($271,581.28).
In a moment of “no duh,” Marcus Asplund, an economics professor at the Copenhagen Business School, told Bloomberg Business that this would surely lead to fewer sales of Teslas.
Current Finance Minister Claus Hjort Frederiksen told reporters that the reason for these changes was to reduce the state’s budget deficit. To that end, the Tax Ministry estimates that treating electric cars like regular cars in tax terms will generate 450 million kroner per year in revenue (the tax previously would have only raise an estimated 30 million kroner in revenue for 2016).
However, I don’t think that the new Danish government is thinking this through. All other things being equal, what would raising the taxes on electric vehicles do?
Right, make people stop buying them. So, what don’t you get if people aren’t buying electric cars?
Taxes on them.
Tax breaks are what caused the massive boost in electric car sales in the first place—in the first half of 2015, with the tax break in place, Danish electric vehicle sales were up freaking 97%. With 1,240 electric vehicles sold in the first half of 2015, that means that only about 37 were sold when there were full taxes on them.
That isn’t going to generate much taxes.
Again, though, the person grasping the poo-iest end of the poo stick (except, again, for people with lung disease, who will be affected very negatively by suddenly rising air pollution) is Tesla.
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We have talked before about how Tesla has been having a rough time in Europe, with many in Europe’s largest car market of Germany taking their time accepting the luxury electric car producer.
This is just making things even harder for an automaker that has the rest of the market up in arms to compete.
However, it is possible that Tesla will, despite some annoyance, be totally fine. Although Bloomberg tells us that the Tesla was an EV sales leader, Tesla sold 503 Model S cars in Denmark during the first two quarters of 2015, when Tesla delivered (not produced, that number is higher) 21,577 during the same time (according to its shareholder letters), making Denmark’s entire market for Tesla Model S cars only 2.3% of Tesla’s total. So, while Tesla will be missing that approximately $49 million from Denmark (and will probably want to keep up its current network of Superchargers in Denmark), it probably won’t be crushed by this.
Besides, Tesla’s No. 1 buyer in Europe is Norway, with 3,243 units sold to date.
Really, Denmark’s administration is shooting itself in the foot with this. Dumping huge taxes on a certain product will just make people buy something else without the exorbitant cost.
You know, like a bicycle. Just be sure to wear a mask while you’re riding around Denmark—we hear air pollution there is going to be gross.
Daniel Susco is a native of the Dayton-Cincinnati area, and has written on a multitude of subjects. He can discuss Shakespeare, expound on Classical Mythology, and even make witty jokes about Pliny the Elder (More like “Pliny the Rounder,” right?). In his free time, Daniel enjoys reading, cooking, woodworking, and long walks on the beach (just kidding – sunburn is no joke). See more articles by Daniel.